Public Bill Committee

[Frank Cook in the Chair]

Frank Cook: I remind the Committee that copies of the money and ways and means resolutions in connection with the measure are available in the Room. I also remind hon. Members that adequate notice should be given of amendments. As a general rule, my fellow Chairman and I do not intend to call starred amendments.
 While on the issue of amendments, hon. Members will already have learnt of the experimental move to insist on explanation notes for each amendment that is submitted. It has been stated that the Government should have no problem with that because they have lots of staff to write the explanatory notes, as the main Opposition parties probably do. However, individual hon. Members might require assistance so it was thought proper to remind the Committee that all hon. Members, not just the Chairman, will have very well qualified Clerks to assist and to support them. They are not exactly at their disposal, but they are here to help.
We are in Committee and it is summer time, so hon. Members have the permission of the Chair to divest themselves of only their outer, upper garments if circumstances require them to do that. We should like them to preserve comfort and be able to discuss matters with ease.

Bridget Prentice: I beg to move,
That—
(1) the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday (12th June) meet—
(a) at 4.00 p.m. on Tuesday 12th June;
(b) at 9.00 a.m. and 1.00 p.m. on Thursday 14th June;
(c) at 10.30 a.m. and 4.00 p.m. on Tuesday 19th June;
(d) at 9.00 a.m. and 1.00 p.m. on Thursday 21st June;
(e) at 10.30 a.m. and 4.00 p.m. on Tuesday 26th June;
(f) at 9.00 a.m. and 1.00 p.m. on Thursday 28th June;
(2) the proceedings shall be taken in the following order: Clauses 1 and 2; Schedule 1; Clauses 3 to 12; Schedule 2; Clauses 13 to 19; Schedule 3; Clause 20; Schedule 4; Clauses 21 and 22; Schedule 5; Clauses 23 to 26; Schedule 6; Clauses 27 to 33; Schedule 7; Clauses 34 to 44; Schedule 8; Clause 45; Schedule 9; Clauses 46 to 76; Schedule 10; Clauses 77 to 83; Schedule 11; Clause 84; Schedule 12; Clauses 85 to 89; Schedule 13; Clauses 90 to 102; Schedule 14; Clauses 103 to 114; Schedule 15; Clauses 115 to 178; Schedule 16; Clauses 179 to 183; Schedule 17; Clauses 184 to 187; Schedule 18; Clause 188; Schedule 19; Clause 189 to 196; Schedule 20; Clauses 197 to 215; Schedules 21 to 24; new Clauses and new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 4.00 p.m. on Thursday 28th June.
I welcome you to the Chair, Mr. Cook. I wish to thank you for attending the Programming Sub-Committee and for listening to its deliberations. You will know that the motion was agreed without opposition because, through my good friend in the  usual channels, the dates and timings were agreed beforehand. Indeed, you will also know that we have provided for a substantial amount of time—more than other parties asked for—to facilitate wider debate on certain areas of the Bill.

Jonathan Djanogly: It is a pleasure to enjoy your chairmanship once again, Mr. Cook. We look forward to receiving the benefit of your guidance and perhaps forbearance during the coming weeks. I say “forbearance” because the hardest issue that we have in respect of the timing of the Committee and consideration of its programming has been the extent to which we have to go over issues that were raised in the other place. That is because, unfortunately, the Government have overturned much of the good work and most of the amendments that were agreed there.
Given the size of the Bill and the enormous knife that the Government intend to take to it through the amendments presented to us only last Wednesday, we are concerned that there has only been a week between Second Reading and Committee. That has severely curtailed the amount of time that we need to consult properly with interested parties, and has impacted unnecessarily and unfairly on our ability to do the Bill full justice in Committee. I can report that that has also been reflected in the comments made to us by interested parties. Therefore, the timing of this Committee shows a Government keen to get the Bill done and dusted before the Labour leadership change, rather than one who want to see the best Legal Services Act possible. That is unfortunate. However, having said that and given that we are where we are, I see no point in opposing the motion.

David Burrowes: It is a pleasure to serve under your chairmanship, Mr. Cook. What better way for me to spend my birthday than to serve on such a Committee? Indeed, it is becoming something of an annual event, having served on the Joint Committee on the Draft Legal Services Bill at a similar time last year. However, I do not want to be looking at and scrutinising the problems caused by this particular piece of legislation annually.
I concur with my hon. Friend’s concerns about the timing. I wish to draw the Committee’s attention to the conclusions of the Joint Committee and particularly to the comments in paragraph 73 of its report, which was concerned about the limited time for pre-legislative scrutiny. It stated:
“Given the significant impact of the Bill’s provisions—it is the first attempt to draw the entire legal services market within one regulatory framework—and the complexity of some of the issues involved, we believe that the priority should have been to ensure that the Committee had sufficient time to scrutinise the draft Bill effectively.”
Obviously, given the passage of time, there has been a lot of scrutiny in the other place. However, the report goes on to state:
“It is in the interests of both the executive and the legislature that the provisions of the Bill are right.”
Given the short time since the Bill was discussed on Second Reading, the timetable to scrutinise the unsurprising number of amendments is a matter of concern. After all, the Bill proposes a significant change to the profession and involves the concerns of consumers and the wider public interest. We need proper time to get the Bill right to ensure that we are not returning in a year’s time to deal with problems arising from the legislation.

John Mann: Mr. Cook, may I welcome you to the Chair? The timing could also be affected if the principles of the Nolan Committee are ruthlessly enforced, debarring members of the Bar Council or the Law Society or anyone who is a legal executive from moving a specific amendment or participating in a vote that specifically impacts on their organisation. I do not ask for a rule at this stage. I ask for the matter to be considered by your good self, Mr. Cook, and your co-Chair.
 There is a precedent for that. On two occasions, members on a Committee considering transport matters were asked to leave and not to participate. That is not my interpretation of the Nolan guidance, but it is one that has been used in the past. It is important that there is clarity in respect of legislation going through the House, because some of the amendments that are being moved are specifically related to professional bodies. If an individual is a member of a professional body—for example, the Bar Council—they could directly benefit from the consequences of that amendment.
The issue for contemplation is whether we interpret the Nolan principles as requiring merely that one declares one’s interest and then fully participates, which I would be totally happy with as a principle, although that impacts on other Bills as well, or we debar that ability to initiate legislation, which has been defined in the past as moving and voting on specific amendments on a Bill

Frank Cook: I thank the hon. Gentleman for his comments, which displayed the characteristically perspicacious attitude that he applies to everything that he comes across. I must point out, however, that the question of Members’ interests is a matter for Members and the registrar—it is not a matter for the Chairman to rule on specifically. The House has rules relating to the registration of the relevant interests of Members, and if anyone is in any doubt, they should consult the registrar rather than the Chairman of the Committee. I have treated the matter more or less as a point of order, which is quite unusual, but it is on the record and I am happy about that.

Simon Hughes: I welcome you to the Chair, Mr. Cook, and I am happy to serve under your chairmanship. For the avoidance of doubt about interests—we may as well deal with the matter at the beginning—I am a barrister and a member of chambers in the inner temple, although I do not practise, and have not for the long time that I have been in this place.
I support the Programming Sub-Committee’s decision; indeed, I participated in making it. It has taken a balanced view, especially in the light of the fact that, as we all know, the reality is that the second sittings on Tuesdays and Thursdays are open-ended, and we are therefore able to adjust the amount of time to accommodate the work load and progress. It means that we have three weeks, two days a week and two sittings a day, which should mean that we have the opportunity to deal with everything.
 The Government amendments that will reverse the seven major changes made in the Lords were not unexpected—they were highlighted on Second Reading. Other amendments are consequential. If the Minister tables many more, the Liberal Democrats might protest, but we will leave such decisions until later.
 There are two other matters that are worth registering. First, the pilot scheme for having explanations of amendments is valuable. It will help those who follow our proceedings and who have an interest in understanding what is happening, and those in the Government’s service when they consider Opposition amendments. It might also help us to understand the amendments that we debate. It would not be the first time that some of us have been in a Committee in which the intention of amendments eludes pretty well everybody, including, sometimes, the people who tabled them. The explanations might therefore reduce the number of amendments that have no great purpose.
Secondly, as I said to the Government Whip, my preference is for two weekends between Second Reading and Committee. I think that that is best practice, although I was not over-excited about that on this occasion. This is a large Bill. The bigger the Bill, the more reason for having the two weekends. If we have a timetable by which we are governed until the end of June, it is imperative with such a large Bill to have two weekends between the end of Committee and Report and Third Reading.
All of us and those who help us will have to do a lot of work in the next three weeks if we are to do justice to the Joint Committee on the Draft Legal Services Bill, on which my hon. Friend the Member for Birmingham, Yardley and others served. We need to do justice to the Lords who have done a fantastic amount of work. I am glad that the Bill started there and not here, because it has taken some of the burden off us. But to do justice to everyone with an interest in the Bill, we will need to give proper time to it and to use the opportunity provided by the flexibility of the evening sittings and the time after Committee to deliberate so that amendments can be tabled for Report.

John Hemming: I agree with my hon. Friend that there is merit in the timetable for the Committee, especially given that debates can be extended on certain days. The only interest that I should declare—I am not in any sense a qualified lawyer—is that I sat on the Joint Committee on the Draft Legal Services Bill. That Committee was concerned that there would not be sufficient time to look at what perhaps are important constitutional changes that might reduce the independence of the legal system. Clearly, the Government have a drive to do that—their attempts to remove the Lords amendments are symptomatic of it. Although I accept the merits of timetabling and the circumstances, there is no conflict with the fact that it would have been better to have a longer period for pre-legislative scrutiny.

Question put and agreed to.

Motion made, and Question proposed,
That, subject to the discretion of the Chairman, any written evidence received by the Committee shall be reported to the House for publication.—[Bridget Prentice.]

Simon Hughes: I just want to say that this is a welcome innovation. This is not the first Bill where these arrangements have existed—I have sat on other Committees dealing with such matters—but it is a good way of ensuring that evidence received by Committee is in the public domain.

Question put and agreed to.

Clause 1

The regulatory objectives

Jonathan Djanogly: I beg to move amendment No. 217, in clause 1, page 1, line 10, after ‘(e)’ insert ‘subject to objectives (a) to (d),’.
I declare my interest as a solicitor and member of the Law Society. Before I start, may I mirror the comments of the hon. Member for North Southwark and Bermondsey about the new amendment notes? We, too, believe that those are a good idea and innovation and we are grateful to the Clerks for their guidance on how they should be put into practice.
In welcoming my hon. Friends and other hon. Members to the Committee, I would like to make a few brief remarks at the start, because some context is justified, considering how many reports, conducted by so many people, have preceded this Committee. The original Office of Fair Trading report was followed by the visionary Clementi report, then by a White Paper, an excellent report from the Joint Committee on the Draft Legal Services Bill, on which my hon. Friend the Member for Enfield, Southgate served, and a thorough review in the other place, which in many ways moved the Bill back to the original Clementi vision, to the satisfaction of my hon. Friends and myself. We now have a rather long-debated Bill.

John Mann: Within that lengthy and detailed deliberation, what percentage of time was given over to those who do not have a direct, professional interest in the Bill?

Jonathan Djanogly: No doubt the hon. Gentleman will inform the Committee of the answer later.
 At each stage before the Bill came to the House of Commons, it has been moved forwards and refined, whether by the Joint Committee, the Government or the Opposition, and it is in pretty good shape. However, the core Government amendments will regress the Bill. Most of the key Government amendments are wrecking ones, which is an unfortunate state of affairs affecting important issues of principle, some of which are of constitutional importance.
Let me move on to part 1, which contains the key clause dealing with the regulatory objectives of the Bill, and amendment No. 217, which is a probing amendment. We are proposing that the following words be inserted into clause 1(1)(e):
“subject to objectives (a) to (d)”.
That would ensure that the objective of promoting competition is expressly subordinate to the objectives of protecting and promoting the public interest, thereby supporting the constitutional principle of the rule of law, improving access to justice and protecting and promoting the interests of consumers.
Clause 1 sets out the eight regulatory objectives that the Legal Services Board, the approved regulators, and the Office for Legal Complaints will be under a duty to observe when exercising their functions. The Bill does not rank those objectives in order of importance. Although we agree that the regulatory objectives are all-important to the Bill, some are more significant than others: namely,
“protecting and promoting the public interest...supporting the constitutional principle of the rule of law...improving access to justice”
and
“protecting and promoting the interests of consumers”.
Those four objectives are the core aims of the Bill, dealing with the foundation issues from which others emerge, which is why we suggest that the specific objective of
“promoting competition in the provision of services”,
such as are provided by authorised persons, be subordinated to the other four, which are far more generic and wide ranging. Indeed, the aim of promoting competition in the provision of services would mean lower prices and better services for consumers. To that extent, it falls under one of the four principal objectives, to which it should be subject, namely that of
“protecting and promoting the interests of consumers”,
as stated in paragraph (d).

Simon Hughes: Amendment No. 217 was tabled by my hon. Friend the Member for Birmingham, Yardley and myself, too. I am conscious that we are not breaking new ground—the matter was discussed in the Lords and on Second Reading.
Clause 1 is a statement of regulatory objectives. Although those objectives are central to the Bill, we must ensure that people understand the principles under which lawyers act, and I have made that point privately to the Minister, her officials, colleagues in the Conservative party and others. We ought to ensure that people understand because the Bill is about the set of principles that govern institutions and bodies such as the Legal Services Board, which is dealt with in clause 2. We should write the Bill so that it is clear that the principles govern the institutions that it creates. I shall come back to the point about structure.
The starting point of the Bill is the list of objectives. They are good objectives and it is good that they are clearly set out. People will be pleased to see that the objectives of
“protecting and promoting the public interest...supporting the constitutional principle of the rule of law...improving access to justice...protecting and promoting the interests of consumers...encouraging an independent, strong, diverse and effective legal profession...increasing public understanding of the citizen’s legal rights and duties”
—that is hugely important—and
“promoting and maintaining adherence to the professional principles”
are set up in lights, as it were, at the beginning.
The amendment deals with the objective of
“promoting competition in the provision of services within subsection (2)”
as stated in paragraph (e). As the hon. Member for Huntingdon said, the amendment would ensure that we get our scale of priorities right. The legal system is a public service, although many practitioners are private, by which I mean barristers and solicitors other than those in the Government’s service or those who are employed by public agencies. Legal service providers are there for two purposes: first, to participate and to ensure that the legal system works well and fairly and, secondly, to represent the people. Those two purposes have to be uppermost in the scale of priorities, beyond the principle set out in paragraph (e).
Of course, the public should be able to choose which solicitors and barristers they use—that is happening increasingly and it is a good thing. However, such choice is not the central, core reason why we have a legal system. People go to legal institutions to seek just and fair answers. It is a bit like the issue of the health service. For me, given my political hinterland, the important thing about the settlement of the post-1945 Attlee Government and the welfare state was that we had a national health service to which everybody had access without having to worry about their finances. Competition among providers of health services to ensure quality of care is not the first principle. We could argue and debate that, but the principle is that everybody should have access to a good-quality health service. The same principle applies to legal services.
Some people in the legal system are directly employed by the public service, including judges, district judges—formerly stipendiary magistrates—and the lay magistracy, whose expenses are paid by the public service. Court staff are public servants, so they are outwith this debate. Other people can become involved in public service when they step into the legal system or do anything involving the courts. Giving advice at the beginning does not necessarily involve the courts, but once they are involved a public service is being supported.
 John Mann rose—

Simon Hughes: I shall make just one point before taking an intervention from the hon. Gentleman. When people seek legal advice about a dispute with a neighbour, a matrimonial dispute or anything else, they may hope in the first place that the matter never goes to court and can be resolved outside the courts. If people want to make a business contract, the matter may never go to court—that would only happen if it went wrong. I appreciate that lots of things that are not court-related are one step removed from the measure. However, that does not mean that one should not ensure that all those who join the honourable professions within the legal service—there are increasing numbers of them, including people dealing with patents, legal executives and so on—understand that, fundamentally, their duty is to ensure that the rule of law comes first and that access to justice and all the other principles are established. Those things should come first and competition should be subject to them. I support the amendment.

John Mann: The hon. Gentleman said that the key principle behind the Bill is that the general public should know the rules governing the legal profession. However, is there not a second key principle behind the Bill? The public and the individual should be empowered in any complaint against the legal profession, precisely because of the danger that legal professionals could use their expertise and knowledge to threaten action against the individual. Empowerment is a second vital component of the Bill.

Simon Hughes: I accept that. The hon. Gentleman has had experience in his constituency, particularly in fighting the good fight on behalf of people who have suffered as a result of their employment and sought legal redress. He and I have served on Committees together when this issue has been on the agenda and we have sought to give proper compensation to those people, very much belatedly. The Minister has played an honourable part in that and other people were supportive.
The hon. Gentleman is right. He will hear me say, as the Committee goes on, that the public should be entitled to clear access to the service, to understand what is going on and to be sure that, when they go through a door marked “The Lawyers”, they know with whom they are dealing, whether it is a qualified solicitor, a legal executive, a clerk, a trainee or the tea boy, because often they do not and they are left in the dark. Sometimes, people think a person is a solicitor when that is not so. They may not know, when they go to court, whether their barrister has one year or five years’ experience, and sometimes they do not know whether the barrister has done any such work before. People have turned up at court and meet the person representing them for the first time. In turn, that person has never seen the papers until two seconds or two minutes before, has clearly not been briefed and cannot, given the time that they have spent on the case, properly represent that individual. There are huge issues to consider.
If people have a complaint, they need a service that ensures that they have equal status. That is why I support the setting up of an independent body, whereby people can go through one door and all complaints can be dealt with objectively. I will support the hon. Gentleman in some of his amendments, whether probing or otherwise, to ensure that we have independence and that the lay person, though not a lawyer, speaks out strongly. If we fund a legal service, as we should—I am arguing for more funding for legal aid in other contexts because we still need significant increases in funding for the public legal service in England and Wales—we have to ensure that the public, irrespective of their education, means or experience, have proper access to it, so I share the hon. Gentleman’s view.
I am told that we can return to this matter but, as for the amendment and the specific list of interests, I hope none the less that, given his background, the hon. Gentleman will be sympathetic to the proposal. It simply says that the promotion of competition should come after the first four principles: public interest, including the interest of the people whom he and I represent; the constitutional principle of the rule of law, to which we should all sign up; access to justice, which is about the rights of lay people; and protecting and promoting people’s interests as consumers.
I hope that the Committee will support the amendment and that the Minister will be sympathetic to it. I hope that she realises that this is a more than just a game, and that a second-tier principle should come after the golden principles of the Bill. If we do not have the golden principles right, let us change them. Let us establish the core principles and ensure that it is not competition first and the devil take the hindmost, but guarantee that competition is subject to those four principles. I support the amendment.

Bob Neill: May I say what a pleasure it is to serve under your chairmanship, Mr. Cook. Noting the birthday of my hon. Friend the Member for Enfield, Southgate, I remind him of the old adage that, as time goes on, old lawyers never die; they just lose their appeal. Having got the bad joke out of the way, I wish to declare my interest as a member of the Bar, although I do not practise. Indeed, I did not renew my practising certificate. I therefore do not consider that I am likely to be prejudiced by anything that is said in Committee.
I support the amendment tabled by my hon. Friend the Member for Huntingdon and the observations made by the hon. Member for North Southwark and Bermondsey. It seems sensible to set out such priorities. It is the right approach. In fairness to the legal profession it sets out what in my experience of some 30 years or more is the way in which the majority of lawyers regard the profession and their responsibilities. Having heard some of the things that were said, perhaps for legitimate reasons, on Second Reading, I regret that it could be suggested that the majority of lawyers are anything other than decent and reputable people who follow such principles in their own career. In the 30 years during which almost exclusively I worked in the criminal courts, either on legal aid or otherwise publicly funded cases prosecuting on behalf of the Crown Prosecution Service, I found that with the people with whom I dealt.
Solicitors, barristers and legal executives—those who do the back-up—take the whole issue of their responsibility to the public interest hugely seriously, as they do their responsibility to lay clients. They see that as the thrust of their profession, rather than the commercial issues of consideration. Of course, they all need to make a living, but that is the how the majority of lawyers regard their profession. If we set out such principles at the beginning of the Bill, it will clearly demonstrate not only what the profession believes to be the case, but what Parliament rightly says should be the case in the public interest. It will make explicit the best practice of our institutions. The amendment would be a constructive start and fit in with the profession’s desire to have constructive independent regulation that engenders public confidence.

John Mann: I did not quite catch the comments of the hon. Member for Huntingdon during the speech of the hon. Member for Bromley and Chislehurst, but is it not precisely to protect the reputation of decent solicitors, barristers, legal executives and others that the Bill must contain clarity and robustness in its procedures and have the ability to take on the minority who bring his profession into disrepute?

Bob Neill: I agree with the hon. Gentleman about such principles. I am glad that he recognises that it is a minority who cause problems. That needs to be put firmly on the record. It is exactly because I agree with him that I want the Bill to have a robust and, above all, an independent framework for ensuring public confidence in the profession. I want it to be independent of the profession, as well as independent of the Government. The amendment would be a good start in setting out priorities.

Bridget Prentice: Let us be clear. We all agree that the majority of lawyers are dedicated and do a very professional job. I do not think that anyone resiles from that. The issue about whether one regulatory objective should take precedence over another has been debated since Clementi published his review in December 2004.
 I invite the Committee to reject the amendment. Ensuring effective competition is essential to the new consumer-focused regulatory network. I think that that might be only the first or second time that the word “consumer” has been mentioned in our deliberations. However, it will be repeated ad nauseum throughout because the Bill is about the consumer and protecting the consumer. The promotion of competition encourages innovative and more efficient ways of providing legal services and firms to address the needs of the consumer in the legal sector. Therefore, it is right that we encourage firms to be responsive to consumers’ needs with respect to price, quality and variety. For that reason, the competition objective in clause 1 is consistent with both the public and the consumer interest. I do not agree that it should be seen as of lesser importance than any of the other objectives.

Simon Hughes: The Minister may be about to advance some more arguments, but it is not sufficient to say that consumers are important and therefore cannot be a subsidiary qualification. I am sure that she appreciates that. I hope that she will come on to evaluate the importance of the other objectives and answer the obvious criticism made by the hon. Member for Huntingdon, me and others, which is that they are in a different league of value. Therefore, can we have some unpacking of the answer? Just reciting, “Consumers are important and therefore have to take equal priority” is not a sufficient answer.

Bridget Prentice: I hope that I am going to be able to do that. Those were my introductory remarks. I need to establish in this Committee that the Bill is about consumer interest and ensuring that the consumer is properly protected and valued. Also, competition is a priority on the international stage. I dare say that later on in our deliberations, people will want to comment on the value that the legal profession brings to our economy through its international work. It is not right that the Government relegate its importance whenit comes to this landmark piece of legislation. Competition in professional services is central to the work of the European Commissioner for Competition. I agree that competition has a key part in reform of legal services.
In addition to the benefits of competition itself—and I think that this might address the point madeby the hon. Member for North Southwark and Bermondsey—the Government are opposed to ranking the objectives in any way. It would be against the recommendations of Sir David Clementi who proposed that the regulator should be able to balance the objectives on a case-by-case basis. The Bill realises that recommendation and establishes a risk-based and proportionate regulatory structure in which the board, approved regulators and the Office for Legal Complaints can look at how each of the objectives applies in any given situation. We have consistently said that the objectives should not be weighted in any way, and we have resisted the call from some in the consumer arena who said that the consumer objective should take preference. I resisted that, despite the fact that I say consistently that the consumer is at the heart of this Bill. We have also resisted similar arguments from the legal profession saying that one or other of the legal objectives should be right at the top.
The Joint Committee suggested that, in the explanatory notes, the objectives should not be listedin order of importance. We agreed with that recommendation and have not listed them in that way. The amendment would be at odds with the principle advanced by the Joint Committee, which is why I cannot agree to it.

Jonathan Djanogly: May I first deal with the important remarks made by my hon. Friend the Member for Bromley and Chislehurst? He said that what the clause deals with is reflected in the current practice of the vast majority of lawyers. On Second Reading, certain hon. Members—they know who they are—seemed to regard the Bill as a chance to have a go and bash up lawyers. I put it on the record that most lawyers are hard working, reputable and provide a good service.
The hon. Member for Bassetlaw made an important point in asking whether a key objective should be support for the person in the street coming up against a sophisticated lawyer. The answer is yes, but that is covered in paragraph (d):
“protecting and promoting the interests of consumers”.
As that is one of the priority objectives in our amendment, it would not negatively impact on what he wants in that regard.
I was confused by the Minister, who initially said that the Bill is primarily about protecting the consumer interest. However, that is not true. Equal consideration is given in clause 1(1) to all the objectives. The consumer interest is not put ahead of the others. She went on to say that the objectives were to be given equal value. However, the two things that she said conflicted. I did not see where she concluded.

Stephen Hesford: Is not a central problem with the hon. Gentleman’s amendment, which I hope the Committee will reject, that it is limited to paragraphs (a), (b), (c) and (d), and does not refer to paragraph (h), which is a large percentage of the clause, as hon. Members will see on reading subsection (3), which deals with
“professional principles”?
As a practising barrister for 16 years before I came into this place, I should have thought that since we are talking about what the profession stands for the core principles in the amendment should include paragraph (h)—if it were a core element as he describes it—but it does not. Is there not some confusion? Is not what he is doing partial? Therefore, what my hon. Friend the Minister said is right.

Jonathan Djanogly: The hon. Gentleman makes an interesting point, but a different one from the Minister, in saying that another objective should be included in the core ones. We could debate that as a stand-alone issue. However, that is not the point that the Minister was making, which was that the clause should be left as it is and the objectives should be treated equally.

Simon Hughes: I want to pick up the point made by the hon. Member for Wirral, West. I think that it is valid to argue that there are two principles in the list of objectives that could be added which are not to do with self-interest. There is the citizens’ rights objective in paragraph (g), which the hon. Gentleman alludes to, and the general adherence to “professional principles” in paragraph (h). I hope that the hon. Member for Huntingdon and his colleagues will meet with me and my colleagues when we come back on Report or later to consider a measure that meets that concern.

Jonathan Djanogly: I now give way to my hon. Friend.

David Burrowes: I hear the Minister’s response and her assurance that an explanatory note deals with the competing objectives. In evidence to the Joint Committee, the Solicitor Sole Practitioners Group made the point that the Legal Services Board is being expected to balance seven highly complex regulatory objectives against each other with no guidance from Parliament. That is an approach that has not always worked well in other areas of legal regulation. It is important to prioritise, as is set out in the amendment, to express core principles.

Jonathan Djanogly: I take the point made by the hon. Member for North Southwark and Bermondsey. It is an area that is worth looking at. However, it is different from our amendment and from what the Minister is saying, but that does not make it an invalid point. I agree with what my hon. Friend the Member for Enfield, Southgate had to say. I was going to conclude on that point. I am not entirely sure whether the Minister accurately understood what the Joint Committee said.
The Joint Committee did not explicitly recommend that the objectives should not be prioritised. It said that, if they are not prioritised, the explanatory notes to the Legal Services Act, as it will be, should be made explicit. The Joint Committee noted that the Government had not ranked the regulatory objectives in order of importance in the draft Bill, but it was concerned that that could create uncertainty and confusion over how the objectives are applied. The amendment would clarify that issue, so I thank my hon. Friend for his intervention.

Stephen Hesford: I have the Joint Committee report in front of me. I sat on the Committee, as did the hon. Member for Enfield, Southgate. Paragraph 5 states:
“If it is not made explicit on the face of the Bill that they”—
the issues we are now talking about—
“are not ranked in any particular order, it is inevitable that they will be seen as listed in order of priority. We therefore recommend that the Explanatory Notes to the Legal Services Act should make it explicit that the objectives are not listed in order of priority.”
In other words, the Committee unanimously did not want any kind of priority setting.

Jonathan Djanogly: All I can say is that I do not think that I said anything different from the hon. Gentleman. It would come down to what was in the explanatory notes. That was my reading of it and I think of my hon. Friend the Member for Enfield, Southgate, who also sat on the Joint Committee.
There is no doubt that this is a point that has been through the hoops. That will be the case for many of the points that will be discussed over the coming weeks. Having heard the debate, I would like to put the amendment to a Division. I will recommend that my hon. Friends vote in favour of it.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 10.

Question accordingly negatived.

Frank Cook: It has come to the attention of the Chair that at least one hon. Member is clearly using a device with which to send text messages. The Speaker’s Panel of Chairmen has considered the use of such devices numerous times and, on each occasion to date, has decided against giving permission. I therefore ask all members of the Committee to bear my words in mind, and I ask the particular hon. Member to desist forthwith.

Jonathan Djanogly: I beg to move amendment No. 207, in clause 1, page 2, line 7, at end insert—
‘(ca) That authorised persons should not act where there is a conflict between the interests of two or more of their clients, or between the authorised person and their client.’.
 I propose the amendment on behalf of my hon. Friends. It was suggested by the Law Society and would ensure that the avoidance of conflict of interest is included in the professional principles, the promotion of which will happen by virtue of the regulatory objective in clause 1(1)(h). At present, the Bill will require the Legal Services Board, the approved regulators and the Office for Legal Complaints to act in a way that is compatible with the regulatory objectives.
The regulatory objectives are set out in clause 1, one of which is
“promoting and maintaining adherence to the professional principles”.
It could be seen as important that the Bill should contain such an objective. It is also important that the new regulatory structure maintains and builds on the strengths of the existing system, while providing a more coherent structure for oversight regulation and ensuring that approved regulators separate their representative from their regulatory functions.
One of the main strengths of the existing regulatory system is the strong ethos of professionalism that it engenders, which is respected by the great majority of lawyers. The professional principles are set out in clause 1(3) and require authorised persons to
“act with independence and integrity...maintain proper standards of work...act in the best interests of their clients...comply with their duties to the court”
in respect of the conduct of litigation and advocacy, and keep the affairs of clients confidential.
At present, the principles do not include the need to avoid a conflict of interest. That is a surprising omission. The charter of core principles of the European legal profession adopted by the Council of Bars and Law Societies of Europe—the umbrella organisation for all European legal professional bodies—specifically includes avoidance of conflicts of interest, whether between different clients or between the client and the lawyer. We believe that that is an important principle of practical significance to the legal profession and its regulators. It is not clear why it has been omitted from the Bill, and the amendment is designed to fill the gap.
Several points that came out in our reasoning of why the Lord Chancellor should have to concur with the Lord Chief Justice on appointments to and terminations of the board are relevant. Time and again, we have stressed the importance of maintaining the independence of the legal profession from the Government and the dangers of losing that, whether as a result of an actual or perceived increase in the Government’s interference.
The amendment is another means by which we can demonstrate that the Bill will not destroy the independence of the legal profession and will not be used by the Government as a way in which to intervene and meddle in legal affairs. Such a clear statement made at the beginning of the Bill in the regulatory objectives that will govern it that prohibits an authorised person from acting when there is a conflict of interests will ensure, as well as sending out a clear message to those overseas and at home, that the independence of the legal profession is not threatened by the Bill.

John Mann: This is a phenomenal amendment, and I trust that the hon. Gentleman will consider his tactics, counsel Members and work out how best to proceed to ensure that it is made. If that happened, it would produce the most phenomenal change to the way in which the solicitors’ profession works.
I shall give one example, but I could give dozens. There might be a firm of solicitors that acts for a claims handler; in other words, the claims handler provides work for the solicitor. A claimant is contracted as the client of the solicitor. However, the solicitor might assist the claims handler, with whom he has a professional relationship, and act in other ways to get moneys out of the claimant, which might later become a matter of dispute. That is a common situation; indeed, most claims handlers act in that way through the direct relationships that I described.

Kevan Jones: May I give my hon. Friend an example? Watson Burton and P and R Associates in Newcastle acted in exactly the same way as he suggested in his example: £350,000 was taken from miners’ compensation and passed to P and R Associates, and it was not clear in whose best interests Watson Burton was acting but, clearly, it was not the clients’. Would the amendment not outlaw that type of relationship?

John Mann: It clearly would, but it goes much further. The measure would come into play on financial services and the provision of loans, the motor insurance industry and the funding of conditional fee agreements. When there is a contractual relationship—we know scores of examples—the duality of representation comes into play. That argument has repeatedly been used to demonstrate the catch in which individual consumers frequently find themselves when financial institutions have provided financial support in the form of loans, particularly since conditional fee agreements were introduced in 2000. Claims handlers have sometimes gone and sorted out a claim. The measure goes well beyond the miners’ claims that I have been involved with and gets into the heart of a much bigger business.
The hon. Member for Huntingdon may have inadvertently hit upon quite a solution to the problem. It is rather more draconian than any that we on the Labour Back Benches had considered, which is why we did not table an amendment ourselves. We have always taken the view that there needs to be some kind of parity between defending the rights of the consumer and the ability of the legal profession to do its honest business well. We have always considered the matter on the basis that regulation—or self-regulation—that allows the consumer proper redress for complaints is the way forward, as long as it is robust. I still veer toward that principle, because I think that it would protect the good name of the profession better than draconian legislation.
The hon. Gentleman has come up with the most draconian of proposals. It would transform the situation and is therefore worthy of some real consideration. I am a little loth to rush into such a major change to the way in which the profession does its business this morning, but I am interested in what the Minister and the hon. Gentleman have to say, because the measure goes well beyond anything that I might have proposed. I rather warm to the amendment, and I fear that I might have to obey a call of nature if a vote on the matter suddenly arises.

Kevan Jones: Like my hon. Friend, I read the amendment last night with some intrigue. Has the penny dropped for Conservative Front Benchers that they must fight for consumers’ rather than lawyers’ interests? As my hon. Friend the Member for Bassetlaw eloquently said, the amendment would drive a coach and horses through the activities at least of the claims handling companies, and if it made those organisations disappear, I would not be too sad.
The amendment says that
“authorised persons should not act where there is a conflict between the interests of two or more clients”.
I should like to offer a couple of examples. The first is the case of Watson Burton andP and R Associates, which I just mentioned. P and R Associates isa claims handling company that passed on miners compensation cases to Watson Burton, which then took cases to the scheme. At the end of the case, Watson Burton deducted a fee from the compensation that individuals had received and passed it to P and R Associates. In whose best interests were they acting?
If the amendment were adopted, Watson Burton would not be allowed to act for two parties, because the third person in the parties’ relationship is the client. Watson Burton was clearly not acting in its clients’ best interests in the case that I mentioned, and there was a clear conflict of interest between its relationship withP and R Associates and the best interest of its clients.
I have been trying to think why the Conservatives would propose the amendment. The amendment would demolish trade union legal services, because most referrals to trade unions are passed on either to an in-house firm of solicitors or to a panel of solicitors. Is there not a conflict in that three-way relationship?
My second example, in which there was indeed such a direct conflict, is a situation that involved the Durham National Union of Mineworkers, which took in miners compensation claims and passed them to Thompsons solicitors, which then deducted 7.5 per cent. from the final claim award and passed it back to the NUM. Again, there was a clear conflict of interest between the actual client and the relationship that Thompsons had with the Durham area NUM.
I am not sure whether the hon. Member for Huntingdon realises what he is proposing; but, as my hon. Friend the Member for Bassetlaw has said, it is quite a draconian way forward. I sympathise with much of what is proposed, and I would not like to throw it out altogether. Unlike my reasonable Friend the Member for Bassetlaw, I am not a light-touch regulator in this field. There is a need for strong and hard regulation of the legal profession, because, sorry as I am to say it, I do not accept the rosy picture that has been painted of that profession this morning, given the way in which lawyers have dealt with my constituents in relation to miners compensation.
I warm to the amendment, but I point out to the hon. Member for Huntingdon that I think there are consequences that he has not thought about.

Simon Hughes: There was speculation on Second Reading about whether one or both of the hon. Members for Bassetlaw and for North Durham would make it to the Committee, so I am glad to see that their representations fell on happy ears in the Whips Office and that they both arrived as a double act. The double act was to be assured, and if one of them cannot be here for some reason then the case will continue. However, I apologise to the hon. Member for Bassetlaw for calling him the hon. Member for Mansfield on Second Reading; I stand corrected.
I am not troubled by the amendment. Had I been so, I would not have signed up to it and would not have taken my hon. Friend the Member for Birmingham, Yardley along with me. As the hon. Member for Huntingdon said, the principle is an important one. Indeed, as I think he said, it is not an invention of his or of mine, and it is not just an invention of the Law Society or of those who directly advise us; it comes from somewhere else—from the charter of the core principles of the European legal profession, which has been adopted in this country and more widely. That is the umbrella body for all the European legal professional bodies, and I do not know whether that gives it more or less justification, because if one country’s lawyers are not terribly well regarded, the body that represents all the lawyers of all the European countries might be even less well regarded. However, at least it has common support.
The principle is important. Subsection (3), as we know, stresses the importance of acting with independence and integrity. Acting with independence is very important. I remember, as will anyone else who has been a lawyer, that one sometimes has to say to a client, “I’m sorry, I can’t do that”, “I’m sorry, that is inappropriate”, “I’m sorry, that’s unacceptable”, or “I’m sorry, that is not what can be done.” Lawyers are not bought to carry out a client’s wishes but to give advice and act in accordance with that advice. It can be rejected, but lawyers cannot do things that directly conflict with it. Lawyers often pull out of cases because what they know is incompatible with what they have been told.
 Subsection (3) also stresses the importance of maintaining a proper standard of work and acting in the best interests of a client. Both are not insignificant—I refer to the case of the brief delivered at the last minute. In England and Wales, the service that barristers give is better than it used to be, as briefs used to be given a moment or two before the case, but there is still a job to do to maintain proper standards of work.
Subsection (3) also mentions the duty to comply with the duties to the court in respect of the conduct of litigation advocacy. Again, that comes up quite often. There is sometimes a duty to share something with the court or with people who represent others in court, or to advise a judge of something. Sometimes that should be done confidentially or permission should be sought. 
The last issue stressed in subsection (3) is the requirement to keep the affairs of clients confidential. By definition, that is important and comes up in every affair from the most simple and uncomplicated to the biggest issues of state, such as when the Law Officers, as the lawyers who advise the Government, argued that they should keep their advice confidential when they advise on issues such as whether it is legal to go to war in Iraq. It applies across the gamut.
Under the amendment, people should not act where there is a conflict between two or more of the clients or between the authorised person, as defined in the Bill, and the client. That is important. I remember discovering during an election campaign in which I took part that I was being sued for libel by someone who took exception to a press comment that I had made about them—

Kevan Jones: I cannot understand that.

Simon Hughes: It was an eminent trade unionist, as it happens. I went to the solicitors whom I had used in the past and found very helpful, and they told me that that they would love to help me but they represented that union on that occasion. They did not think that it was appropriate; I understood that and it was completely the right response. I sought advice elsewhere and was guaranteed that independence. No argument could be made by the trade unionists that the company was compromised in representing that union in the past, present or future.
I hope that the Minister will be sympathetic. She clearly has support from the Opposition, and growing excitement and support from Labour Back Benchers. I have not done the figures, but I think that if we rustle up everyone on these Benches, plus two, we should be there. [Interruption.]The Whip says no, but we should manage it if we have two more and keep a few outside the room. The Chief Whip—we never know what might happen next month, but I mean the Whip—is keeping his tally on the scoreboard, which is not as exciting as yesterday’s cricket but none the less of some interest.
 My point is that there is a good prospect for the amendment. Two parties have signed up to the proposal. There is warming support from the intelligent consumer lobby among Labour Back Benchers, and so I hope that the Minister will give a positive and enthusiastic response. We are already on page 2, and we are making great progress through the Bill, so it is time for the Minister, who resisted the first amendment, to make her first generous concession of the day, so that all the people who came to watch us will go home thinking that there is real movement in Committee and that Committees are a procedure worth having. I am sure that the Minister will not disappoint—at least, I hope not.

Bridget Prentice: Will I disappoint or not? My notes tell me that I should resist the amendment, but perhaps there will be some movement. Let us not get too carried away. My hon. Friends describe the amendment as draconian, and it is an interesting concept that the Opposition want to impose a draconian measure on the legal profession.
 I must resist the amendment, because a couple of issues need to be teased out. On the face of it, it looks reasonable and sensible because the purpose of the Bill is to protect the consumers of legal services, so that when someone puts a case in the hands of a legal professional, it should be taken as read that the lawyer has a duty not to compromise the client by having conflicting obligations elsewhere. The amendment may look reasonable, but any conflict between an authorised person’s interests and those of a client is already prohibited under clause 1(3)(c), which requires the authorised person to act in the best interests of their clients. If there were two clients with conflicting interests, it would be impossible for the authorised person to act in the best interests of both. The rules are complicated, and I am reluctant at the moment to put the amendment into the Bill.
 I am a little surprised that the Law Society is backing the amendment, because it recently liberalised its rules, which I believe now allow a solicitor or law firm in certain circumstances to act in what might otherwise be a conflicting situation, provided that certain conditions are met. A key proviso is that the client gives informed, written consent. The conduct rules of the Council for Licensed Conveyancers also allow a licensed conveyancer in some situations to act for opposing parties, but again with strict conditions to protect consumers.
At the moment, there is a proper balance between ensuring that consumers’ interests are protected and avoiding disproportionate restrictions. I would not want to introduce a provision that compromised that too much.

John Mann: In terms of unforeseen consequences, has the Minister considered that, if the amendment were part of statute, it would provide a defence for any solicitor who had identified two clients to the individual consumer by definition, because it is in statute? In other words, they would say that, because it is in statute, they are either breaking the law, which would require a legal remedy, or that they are not, otherwise someone would have taken legal action against them. Therefore, the consumer arguing on the best-interest principle, as in the case of Watson Burton and P and R Associates, would be tied down in a legal defence and a circle that they could get out of, purely because it existed in statute, which in itself would be the defence of the solicitor who might not have acted in the best interests of the individual consumer.

Bridget Prentice: My hon. Friend makes a reasonable and valid point, and it is partly because of his argument and that of my hon. Friend the Member for North Durham, as well as the Opposition spokesmen, that I would like to reflect on the matter. I am worried that the amendment would cast doubt on the validity of a number of existing rules. That would not be welcomed by providers or consumers, particularly when specialised or commercial services are involved. I am not yet entirely convinced that there is a gap, but I am happy to consider the matter further.

Simon Hughes: I am encouraged by the Minister’s reply. Her point about the Law Society recently looking at its rules again and amending them is not inconsistent with the principle. To take a simple case, it would be perfectly possible to have a rule that said that someone in a firm could act for people on both sides of a dispute, provided that there were clearly defined walls between the two parties in the firm. I am grateful to the Minister for her sympathetic response, which is not inconsistent with what she said about the changes in the rules.

Bridget Prentice: The hon. Gentleman is right. A properly run professional firm ought to be able to have that wall, if that were appropriate.
My final point—I make it so that we can further discussions—is that hon. Members should look at the Bill as a whole, and particularly at clause 177, for example, under which all authorised persons will be under a statutory duty to comply with the professional body’s detailed rules on conflicts of interest. When we think about that later, hon. Members should consider whether that might be sufficient, so that we might not need the draconian measure, as my hon. Friend the Member for Bassetlaw described it, that the hon. Member for Huntingdon has proposed.
I agree that it is essential that conflicts of interest are dealt with effectively, and that is why the rules are so important. However, I would ask the hon. Gentleman to withdraw the amendment, so that we can reflect on it further and see whether the amendment or something similar is necessary, or whether we can feel that the Bill covers the concerns that have been raised in other respects.

Simon Hughes: I have not talked formally to the hon. Member for Huntingdon, but I am sympathetic to the Minister’s suggestion and, likewise, I would be willing to look at what she has said and at the linked parts of the Bill. On that basis, if the hon. Gentleman and his colleagues are willing to do so, I should be happy for the amendment to be withdrawn and for us to return to it on Report.

Jonathan Djanogly: Praise from the hon. Member for Bassetlaw is praise indeed. I shall enjoy it while it lasts, because I have a feeling that it will not last for long. However, he should accept that we want a balanced Bill that represents all interests. He was rather blunt in his understanding of where conflict exists. The issue is rather more complicated than the position that he and the hon. Member for North Durham described. In real-life practice, the existence of a conflict can be a complicated or a simple issue, depending on the circumstances. As the hon. Member for North Southwark and Bermondsey said, lawyers have to consider such issues on an ongoing basis and sometimes have to make decisions daily.
The Minister referred to the Law Society’s recent changes to conflict rules. New procedures were required, because the existing rules did not cater for the complexity of commercial transactions in the modern age. The Law Society undertook years of consultation and underwent a tortuous process before those changes came into effect. The hon. Gentleman was quite right that that is a separate point from the amendment, but the two are by no means incompatible. The Minister’s response was heartening, but we are not quite there. It would be tempting to gather the votes of the Liberal Democrats and of my hon. Friends, who support the amendment. On the other hand, I was pleased to hear her reassurance that she would consider the matter further, I assume before Report. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Simon Hughes: I will not make it my practice to comment in all stand part debates, but I want to make one substantive point. Before doing so, it would be remiss of me not to join everybody else in wishing the hon. Member for Enfield, Southgate a happy birthday. I hope that he realises that he shares his birthday with my esteemed nephew, Daniel Hughes, who is 37 today, and that he believes that to be an extra reason for celebration. I shall tell my nephew that he, too, has an extra reason for celebrating, should he need one—I doubt that he does.
I have made a point about drafting and the layout of the beginning of the Bill. One of my crusades in Parliament is to try to ensure that legislation is more readable for the general public, as opposed to parliamentary counsel and specialists. I am keen that Bills follow the logic of what they say they are going to do and are easily readable, so that one does not need continually to cross-refer back and forth. In a detailed Bill, it is right to put the details in schedules, but, ideally, clause 1, as drafted, should not stand part of the Bill. I will not press the matter to a Division, but I am keen to put something on the record.
The long title of the Bill states that it makes
“provision for the establishment of the Legal Services Board”.
It then cites a list of things that the Bill does. The long title is always a good summary of what a Bill does. It is normally readable and clear, as is true in this case, and there is always a catch-up bit at the end—that is true of a big Bill, at least—saying “and for connected purposes.”
Logically, therefore, the Bill should start with the provisions that establish the Legal Services Board before it deals with the board’s functions. That is what happens in part 2 and clause 2, except that clause 2 proposes the setting up of the Legal Services Board, then cross-refers to schedule 1, which deals with the details of the board. That would be a fine way to do it, but clause 1 starts with the regulatory objectives, and anyone reading it would not be clear about who is governed by those objectives, because that is not addressed. It just says:
“In this Act a reference to ‘the regulatory objectives’ is a reference to the objectives of”.
That is a bit like starting a book with the index. One reads the dust jacket and the front page thinking that one will get into the book, only to find that it says, “This is a book which” and then says what the long title tells us. One then starts to read the book, only to find that chapter one is the index or the explanatory memorandum. That is not how most of us like to start a book. If we want to look for something in the notes, we look at the back of the book.
Things get worse, because clause 1(2) states:
“The services within this subsection”—
we therefore have a definition provision first and a definition of a definition next—
“are services such as are provided by”.
We then have a third term that has not yet been explained, because it mentions “authorised persons”. Lo and behold, those persons are not defined until clause 18, which comes under the reasonable heading of “Interpretation”.
 That is not the way to grip the lay public. Let us suppose that I were studying my first year of law or doing a first bit of research, or that someone had asked me in my sixth form to talk about whether the legal system in Britain is fit for purpose, or that I were doing a GCSE exam on the legal system. In such circumstances, if somebody said, “There is a great Bill going through Parliament called the Legal Services Bill, which is all about setting up a new system”, I would give up by the end of clause 1.
I know what answer I will receive. I will be told, “This is what the draftsmen think it is tidy to do”, but we are talking about consumer services. The Minister, more than anybody else, has been promoting them, so I ask her to do something before Report. I appreciate that draftspeople are wonderful and important—we all need them and they are all lovely—but they should do what the elected representatives want them to do. They should not drive the elected representatives, because they are the servants.
Clause 1(3) outlines “professional principles”. That is a further definition of the bit of definition in subsection (1). Subsection (4) then qualifies the “authorised persons”, who are not defined untilclause 18, by saying that they are
“authorised persons in relation to activities which are reserved legal activities.”
If hon. Members want to know what “reserved legal activities” are, they have to go elsewhere in the Bill. Then, having got through all the grunge—through the coppice—we get to the clearing of clause 2, which we will come on to in a minute and which says:
“There is to be a body corporate called the Legal Services Board”.
To make a serious point, we should start with that and say, if we think it is so—it is what the Government think—“The most important thing that the Bill does is to set up the Legal Services Board and these are the rules governing it”. We should then say, “The Legal Services Board, and/or the other bodies we are setting up, will be governed by regulatory objectives in relation to their activities.” The clause would then read logically. Then we can get on to other things in the Bill.
I will not make this speech again when the matter comes up later, but I urge the Minister to return to the draftspeople with her officials and get the Bill in shape and in an order that reads logically and is consistent with the long title, making it much more user friendly. I hope that that point can be taken up, because it is seriously made. The bigger the Bill, the more important it is. Otherwise, it will shoot about all over the place. I hope that on Report I will not have to table a provision to delete clause 1.

Jonathan Djanogly: I could see the Bill team cringing as the hon. Member for North Southwark and Bermondsey spoke. Of course, the Bill went through quite a process before coming to the House and Committee, so I can I understand their reaction. However, I came across an aspect of alternative business structures when I was mugging up on the Bill over the past few days that covered many of the specifics that the hon. Member for North Southwark and Bermondsey mentioned. Rather than dealing with alternative business structures inpart 5, we will have to deal with a large part of the subject in clause 18, because the definitions do notquite work.

Bridget Prentice: I have a lot of sympathy withwhat the hon. Member for North Southwark and Bermondsey says. I dare not look behind me, because I fear that the Bill team may be cringing at the possibility that the Bill will be reordered. I agree with the hon. Gentleman. I am sure that he has previously campaigned to have things set out in simple, clear terms so that normal people can understand them, use them and have the power that that gives them as a result. I shall think about whether clause 2 in particular should be put at the beginning of the Bill, as it contains a simple, straightforward definition.
The regulatory objectives were put at the beginning of the Bill because of their importance across the whole regulatory framework: they cover the board, the approved regulators and the Office for Legal Complaints, all of which have duties to act in a way that is compatible with the objectives. Those key principles, which underpin the rest of the Bill, were put at the beginning to show their importance. I agree with the generality of what the hon. Gentleman said. Too often, the way in which Bills are written is a minefield for the normal citizen who wants to understand what is happening. I will think again about whether small changes can be made, but we have to be careful not to mess about with clauses all over the place and make the thing topsy turvy.
Clause 1 sets out the eight regulatory objectives that have to be observed by the board, the Office for Legal Complaints and the regulators. The public interest objective was inserted in the other place, and was included to ensure that the board, the OLC and the regulators consider the public interest when discharging their functions. All the objectives have been included following considerable consultation with stakeholders, including consumer groups and the legal profession, and I believe that they are consistent with what Sir David Clementi said in his report.
The clause is important, because it sets out the clear objectives by which all partners in the new framework must abide. The board is subject to parliamentary scrutiny, and the accountability described in the clause creates the yardstick by which the board, the OLC and the regulators can be measured. On that basis, taking into account the plea from the hon. Member for North Southwark and Bermondsey that the Bill should be as clear and straightforward as possible, I propose that clause 1 stand part of the Bill.

Simon Hughes: I am grateful for the Minister’s sympathetic reply. I understand the double difficulty of the inherited tradition of those who do the drafting and the fact that the Bill has been the product of pre-legislative and Lords scrutiny. However, it is never too late—better to change it now than end up with a Bill in the wrong order.
May I respond to the Minister’s point, which I understand? If she were troubled about starting the Bill with the Legal Services Board, there would be another way of doing things: to start with the proposition that, from the date of the Bill’s implementation, all the agencies that it refers to would be governed by regulatory principles and objectives. That way, we could come at things generally. Legal services would be governed by regulatory objectives, which would apply to all the bodies and come from the state. There is not just one way.
In the context of what the Minister and the hon. Member for Huntingdon said about subsequent parts of the Bill, may I ask that we make sure that all the necessary repeals and consolidation are included by the time the Bill is enacted? In that way, if somebody came to look at the law governing the legal professions and legal practice, that would all be in the Act, and we would not still have to shoot across to six other bits of legislation. We have a big Bill, so we might as well make it one that does everything, rather than one that refers to four other Acts that people will still have to dig out.

Bridget Prentice: I shall certainly take that on board and see whether we can accommodate the hon. Gentleman.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2

The Legal Services Board

Question proposed, That the clause stand part of the Bill.

Simon Hughes: This clause is very good. It is simple and short, and it ought to be clause 1.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Schedule 1

The Legal Services Board

Bridget Prentice: I beg to move amendment No. 30, in schedule 1, page 121, line 6, leave out ‘with the concurrence of the Lord Chief Justice’.

Frank Cook: With this it will be convenient to discuss Government amendments Nos. 31 to 39.

Bridget Prentice: Now we may get to some of the more detailed disagreements on some of the principles in the Bill. The Committee knows that the Government have always advocated the importance of an independent Legal Services Board—independent from the Government, the judiciary and the legal profession. That is why we have arranged the Bill so that appointments are made in accordance with the code of practice of the Commissioner for Public Appointments.
It may be useful for me to set out the principles of the code: ministerial responsibility, merit, independent scrutiny, equal opportunities, probity, openness and transparency, and proportionality. The code follows the principles established by the Nolan Committee, of which we have heard already, and provides a sound and established basis for making appointments to public bodies. It sets out clear and independent appointments procedures. It does not prevent consultation with appropriate people, and the Government consider that the Lord Chief Justice would be an appropriate person in this context. However, there are good reasons why concurrence is not set out in the measure. Concurrence would give a person other than the Minister—in this case, the Minister is the Lord Chancellor—a casting vote, and in effect, a veto over the appointment of the person selected. Setting out a named person to whom the Lord Chancellor must give concurrence would be absolutely contrary to the principle of ultimate ministerial responsibility for appointments. It would remove the formal role of the Commissioner for Public Appointments—who, by the way, is appointed by the Queen—in the oversight and regulation of public appointments, and it would weaken parliamentary scrutiny. It would not be in the interests of anyone.
It is important that, before the Lord Chancellor can remove board members, conditions, which are set out in the Bill, must be met, including consultation with the chairman on their removal. The conditions provide strong statutory safeguards to prevent the abuse of that power, and it is important that the board is independent of the Government and the profession. Although the present Lord Chief Justice is and previous Lords Chief Justices have been independent, consumer groups have nevertheless been adamant in their concerns about the perception of a person with historical connections to the legal profession. Irrespective of the clear integrity of that office and the office holder, I would not want to damage consumer confidence by setting out a statutory requirement for concurrence in the way that the other place agreed.
We must provide for an independent board, and I can see no benefit at all in requiring the Lord Chancellor to seek the concurrence of the Lord Chief Justice. I have said over and again in meetings with the legal profession and with Members that I cannot imagine the appointment of such a person being undertaken without the Lord Chancellor listening to the views of appropriate people, of whom one is clearly the Lord Chief Justice. However, it is not right to give the Lord Chief Justice, who consumers rightly or wrongly perceive to be part of the legal profession, a veto over such an appointment.

Simon Hughes: I hope to have the opportunity to advance my arguments later, but may I challenge the Minister on the idea that consumers think that the Lord Chief Justice is tied to the legal profession? I challenge her to produce any opinion poll that shows anything like the same problem with confidence in the judges as there is with confidence in the profession. Lawyers have a bad reputation, like estate agents and politicians, and people know that judges are traditionally drawn from the ranks of lawyers, but they do not regard judges as people in whom they cannot have confidence. The statement is just not true, and I honestly ask her to supply to the Committee any evidence of recent polling that suggests otherwise.

Bridget Prentice: In all my discussions with the consumer organisations, they have all been absolutely clear that there is a perception that the Lord Chief Justice represents the legal profession. As the hon. Gentleman knows, perception is important in politics, and it is important here. We are setting up an organisation that is supposed to be giving consumers for the first time an independent organisation to look after their interests. If we undermine confidence at this stage, going through the Bill will be a waste of our time. It is important that the appointment is made in an open and transparent way, and is seen by those whom it is meant to protect as having been done properly, in an independent way.

Jonathan Djanogly: The Minister has referred three times to the interests of consumer representatives. In its Second Reading briefing, Which? called for the Legal Services Board to be appointed by an independent commission and said that all appointments should be made at arm’s length from the Government. How can the hon. Lady explain the fact that the National Consumer Council’s support is different from what is set out in the briefing?

Bridget Prentice: The National Consumer Council, our consumer panel and, indeed, Which? were all of one view in our discussions, which was that the appointment should not be made with the concurrence of the Lord Chief Justice.

Jonathan Djanogly: Ah!

Bridget Prentice: That is exactly the position. I do not know whether the hon. Gentleman was listening, but I made it absolutely clear that concurrence is the problem. It gives the Lord Chief Justice a veto. It breaks the principle of the Nolan rules—the code of practice—because such matters have to be done through ministerial responsibility. Such an argument is a dangerous road to go down because it takes away the role of Parliament to scrutinise the appointments.

Jonathan Djanogly: Are we at least agreed that, while the consumer organisations—or at least Which?—agree with our view and do not support the Bill as it is drafted, they do not support the Government’s view either? Is that a fair comment?

Bridget Prentice: No, that is not fair. Consumer groups support the Government’s view, which is that, when making the appointment, the Lord Chancellor will listen to appropriate people, which will clearly include the Lord Chief Justice. That is entirely at one with the view of the Government as well as that of the consumer.

Kevan Jones: Does my hon. Friend agree that such a measure would extend the role of the Lord Chief Justice to an area that does not exist at present? For example, the appointment of a legal services ombudsman is the Lord Chancellor’s responsibility. The Lord Chief Justice has no role in that appointment.

Bridget Prentice: My hon. Friend is right. I was about to finish my remarks before we experienced that little flurry of interventions but I shall make one more point. If we consider the number of public appointments that are made under standard practice by Ministers, none of them includes the need for concurrence with another person. It is expected that Ministers will make such  appointments properly and within the guidelines and code of practice of the Commissioner for Public Appointments. If they do not, they will be accountable to Parliament. That is key and for that reason, I commend the amendment to the Committee.

Jonathan Djanogly: Amendment No. 37 is uncontentious and addresses a drafting error. As for the other amendments, we oppose them.
 The Bill, as originally presented by the Government in the House of Lords, provided that the new oversight regulator of the legal profession, the Legal Services Board, should be appointed by the Lord Chancellor. That was amended subsequently in the other place and passed by a majority of 50 so that the Legal Services Board should be appointed instead by the Lord Chancellor with the concurrence of the Lord Chief Justice. The purpose of that and similar amendments was to ensure that the regulation of the legal profession is transparently independent of the Government’s control and is seen as such by the widest possible audience.
 I am afraid that the debate over this group of amendments is something of a set piece. Notwithstanding that, there is growing concern at the Government’s intransigence on the issue, which we believe deserves a thorough review. The Minister knows that I normally aim for brevity, but that will not be possible in this instance.
Government amendments Nos. 30 to 36 and 38 to 39 will reverse amendments made in the other place. The amendments will mean that only the Lord Chancellor will be able to appoint the chairman, as well as to appoint and to remove other members of the Legal Services Board. It is imperative that that is resisted. The Lord Chief Justice should be able to act to rein in the power of the Lord Chancellor, so that the latter does not have the potential to overreach himself. There must be checks and balances to guard against any form, real or perceived, of political patronage. We need to appreciate that the political pressures on a Lord Chancellor in the Commons could be greater than in the House of Lords.
The issue goes to the heart of the Bill. The Legal Services Board will be the independent oversight regulator and will sit at the head of the new regulatory framework. The board will oversee the new approved regulators, and will seek to ensure that they carry out their regulatory functions to the required standards. It is therefore important that the Lord Chancellor’s decisions on appointments to and dismissals from the board be made with the concurrence of the Lord Chief Justice.

Henry Bellingham: My hon. Friend has touched on an important point. With all the changes that are taking place in Whitehall, we might well have a Secretary of State for Justice and Lord Chancellor, as it were, sitting in the lower House, where he would come under far more political pressure. That is why this discussion is so important.

Jonathan Djanogly: My hon. Friend has reiterated a point that I made and it is important. I do not think that many hon. Members have thought about the issue in terms of what might happen on a day-to-day basis.
My noble Friend Lord Kingsland stated:
“The issue is simply that the Bill as it stands puts too much power in the hands of a Minister both in relation to the appointment and the removal of the chairman and members of the Legal Services Board.”—[Official Report, House of Lords, 9 January 2007; Vol. 688, c. 148.]
 In a misguided attempt to enhance consumer rights, the Government continue to table wrecking amendments, even though such measures are at odds with the recommendations of the review conducted by Sir David Clementi, the Joint Committee on the Draft Legal Services Bill, and the House of Lords. The proposals have also roused complaints from some of the top lawyers in the country, all of the larger firms of solicitors, and foreign jurisdictions. I also argue that they differ from the Government’s position and rationale as seen in other recent legislation. The Government are out on their own on the issue and they will need to come to terms with that at some point.
In the final report of his review, Sir David concluded that the appointments should be made by the Secretary of State in consultation with a senior member of the judiciary.

Kevan Jones: Did Clementi not say that the Lord Chief Justice would be consulted, rather than hold a veto? That is different from what the Bill currently says.

Jonathan Djanogly: That is indeed true. As I said in an intervention on the Minister, Which? made a different suggestion.

Kevan Jones: Therefore, the Government are not on their own—they are acting in line with Sir David Clementi’s recommendations.

Jonathan Djanogly: No, one cannot really say that. People have commented in different ways. The point is that all of them have suggested that there needs to be a balance to the power of Ministers, but that will not appear in the Bill as the Government wish to amend it.

Kevan Jones: May I emphasise that Sir David Clementi does not support what is put forward in the Bill as amended in the Lords? He said that their lordships should be consulted. Did the Minister not say that on Second Reading?

Jonathan Djanogly: If the Minister had come to the Committee with an alternative to the wrecking amendment that she is now proposing, we might have discussed what was on offer. That is not what is being proposed; what is being proposed is an absolute rebuttal of what was proposed and passed in the Lords. I shall go into all that in quite a lot more detail and I am sure that the hon. Gentleman might wish to intervene later.
It is quite clear from considering the evidence that was given to the Joint Committee in written form and orally that a number of witnesses were extremely concerned about the proposed manner of appointment to the board. Those concerns were reflected in the Committee’s final report, which said:
“We recommend that the draft Bill be amended to provide that the Secretary of State may remove the chairman of the Board only after full consultation with the Lord Chief Justice. Responsibility for the removal of other members—in line with the criteria set out in the draft Bill—should lie with the nominations committee of the Board.”
It continued:
“We share some of the concerns that have been expressed about the scope of the ongoing powers of the Secretary of State that are proposed in the draft Bill which appear to go significantly beyond the recommendations of Sir David Clementi. We therefore recommend that the Government reconsiders whether each of the powers proposed for the Secretary of State in the draft Bill is necessary, identifying those powers that could be removed or transferred. It would be wrong to create a perception that the Government is seeking in any way to exert long-term day-to-day control over the legal profession, or in any sense annex it.”
My hon. Friend the Member for Enfield, Southgate served on the Joint Committee, and we are lucky that he joins us on this Committee with his knowledge and his experience of practice. I am sure that, for our benefit, he will wish to analyse the evidence that was seen by the Joint Committee.
 The Joint Committee recommended that appointments to the board should be made only after full consultation with the Lord Chief Justice. The Lords passed amendments whereby appointments to the Legal Services Board and terminations be made
“with the concurrence of the Lord Chief Justice”.

Kevan Jones: Again, is not the hon. Gentleman shooting himself in the foot? He appears to be shooting his own arguments down in flames. Consultation is very different from what was suggested by the Lords. The Lords proposed a veto over appointments, whereas David Clementi and the Joint Committee are saying that the Lord Chief Justice should be consulted. Is not that what the Minister said on Second Reading? The hon. Gentleman’s proposals are different from what is being proposed on the basis of the evidence that has been referred to.

Jonathan Djanogly: Perhaps the hon. Gentleman heard the Minister differently from me. I did not hear her make any suggestion of the type that he suggests.
The appointments and terminations that the Lords said should be made
“with the concurrence of the Lord Chief Justice”
are those of the chairman and the board members, who are up to 10 in number, but exclude the chief executive, who is appointed by the board. The Lord Chancellor should not be permitted to act purely on the basis of his own decision. It is important that the power does not become a party political tool or a stick with which to beat the profession when the Government deem the profession to be misbehaving or not toeing the line. In order to prevent such an occurrence, it is crucial that the Lord Chancellor be required to obtain the concurrence of the Lord Chief Justice on such points.
Indeed, the Opposition’s view is that the requirement for concurrence is essential to bolster the independence of the legal profession from the Government. An independent legal profession provides the ultimate safeguard for the rights of the individual against state abuse of power. If it were the Government alone who made all the appointments and terminations, would the Legal Services Board not be seen as subservient to the Government of the day? As my noble Friend Lord Hunt commented:
“How else will it be seen to be independent and not merely a creature of the Government or the legal profession?—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1181.]
The former Lord Chief Justice, Lord Woolf, has wisely pointed out that
“the independence of our judiciary is dependent on the independence of our legal profession.”
The Opposition believe that that can only be assured by creating an effective check on the decisions of the Lord Chancellor. Accordingly, the Lord Chief Justice should be consulted about, and concur with, such important decisions.
The need for a check on that power is highlighted by the situation that might arise on removal of the chairman. What would happen if the Legal Services Board criticised the Government, and the Government retaliated through the Lord Chancellor by simply removing the board members from office and appointing puppets to do the Government’s bidding? It might be a Nolan-compliant board of puppets—assuming that the Government of the day accepted Nolan principles. Nevertheless, it could make a mockery of the idea that this is a democratic country.
Why are the Government so opposed to such a constitutional check? The Lord Chancellor has set out his stall against it, possibly because he does not like his decisions to be challenged by the judiciary, yet, not least with the imminent arrival of the clanking fist, he is unlikely to be here for much longer—unlike the Bill. 
What would happen if a Lord Chancellor were to be appointed who had little or no regard for the purpose of and ideals behind the Legal Services Board? On the other hand, Lord Chief Justices have shown themselves to be both non-partisan and even-handed in their actions. On Second Reading of the Bill in the Lords, the Lord Chancellor argued:
“I have to say it gives little comfort to consumers, who rightly see the Lord Chief Justice, although he is a man beyond reproach, as another lawyer in the process.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1164.]
But is not the Lord Chancellor himself a lawyer? The Lord Chancellor’s remarks are simply bizarre in that context. The idea that having lawyers in the process somehow wrecks the system is patently absurd. Is the Prime Minister not a lawyer; is the Leader of the House not a lawyer? It is clear that lawyers can help to supervise such processes even if it involves regulating their own kind. The Lord Chief Justice is a lawyer and he also heads the judiciary, but his position has historically shown that an unbiased operator can assist the Lord Chancellor in selecting the best person for the job, or urging restraint before the removal of, for example, the chairman.

John Mann: I thank the hon. Gentleman for giving way on his eulogy to lawyers. When section 1 of the Courts and Legal Services Act 1990 was passed, what did that specific section say about the appointment of the legal services ombudsman? What was the vote in the House on that section and who was in power at that time?

Jonathan Djanogly: I have no idea. Would the hon. Gentleman care to enlighten the Committee?

John Mann: It is extraordinary that the hon. Gentleman has no idea because that was the precise measure under which the legal services ombudsman was appointed by the Lord Chancellor, under the Courts and Legal Services Act 1990. What has changed between the date of the passing of that Bill in 1990 and now in terms of the principles?

Jonathan Djanogly: Apart from the fact that the ombudsman is not in a regulatory role, we have had an Office of Fair Trading report, two other reports, a White Paper and a Bill that has gone through the House of Lords. That is what is different. As Lord Hunt pointed out in the other place, the matter is all about balance. It would be quite wrong, or even indefensible, to establish an appointments process so evidently lacking in checks and balances. The Legal Services Board must not only be independent, but be seen to be independent. How else are to we to ensure that independence is not siphoned off by the Government?

Simon Hughes: The hon. Member for Bassetlaw may want to have the answer to his question. The fundamental thing that has changed since 1990 is that at that stage the Lord Chancellor was the senior judge, but that is no longer the case.

Jonathan Djanogly: I thank the hon. Gentleman for his considered response.

Bob Neill: Does my hon. Friend accept that the point made by the hon. Member for North Southwark and Bermondsey is reinforced now that we can havea Lord Chancellor in the House of Commons? Such a Lord Chancellor—it does not matter whether he is a lawyer or not—may be a manifest career politician with aspirations to even higher office; Lord Chancellors cannot have such aspirations when they are in the House of Lords. A Lord Chancellor in the Commons may have been a past Home Secretary and could find themselves appointing the body that regulates the profession, which might as part of its duty have to challenge on behalf of the citizen an act of a Home Secretary, past or present. Surely that is a hugely different situation to anything that has occurred before.

Jonathan Djanogly: I thank my hon. Friend for his very personal intervention. He has highlighted something else: there seems to be a misunderstanding on the Government Benches about the political nature ofthe new Lord Chancellor—for a Lord Chancellor in the Commons, that is even more so.

Stephen Hesford: The hon. Gentleman is right to mention the idea that there is some politics in this matter, because it is all about politics and is nothing to do with consumer interest. It is a political point from Opposition Members, some of whom, after 10 years, cannot understand that they are no longer in office. There is a conflict between what he is proposing and what the Government are suggesting. In his formulation, there would be a confusion of parliamentary scrutiny and control because a Lord Chief Justice would not be subject to parliamentary scrutiny and control, whereas the Lord Chancellor is entirely, and he is subject to the will of Parliament.

Jonathan Djanogly: That is not what I am suggesting at all. I am suggesting that there should be balance, not that it should all go to the Lord Chief Justice, and I simply did not understand the hon. Gentleman’s initial point. As a Conservative Government are likely in the near future, I do not know where he is coming from.
When we tabled these amendments in the Lords, many Lords disagreed with them. Lord Whitty argued:
“I do not think that this would be seen as anything but the lawyers attempting to pull back the regulation of their profession to their own...That is the public appearance. I am sorry, but legal services are, in that sense, no different from any other service to the public and to consumers.”—[Official Report, House of Lords, 16 April 2007; Vol. 691, c. 46.]
We believe that that approach is wrong for two reasons. First, we are talking about the Lord Chief Justice—the highest judge in the land—and, secondly, legal services are different from other services in so far as only the law, and by association its practitioners, can ultimately safeguard against the misdemeanours of Government.
As the Joint Committee pointed out:
“It would be wrong to create any perception of government seeking to exert day-to-day control over the legal profession”.
We recommend that the Government should be involved only when it is absolutely necessary.
The Government resisted the amendment, stating that the procedure for appointments envisaged in the Bill was already independent. The Minister in the other place said at the time:
“In no circumstances does it prevent the Lord Chancellor from talking to and consulting the Lord Chief Justice or, indeed, anybody else.”—[Official Report, House of Lords, 16 April 2007; Vol. 691, c. 55.]
Exactly the same remark was made by the Minister earlier today.
The Government must appreciate the importance of perception. Lord Lloyd addressed that issue in the upper House, saying that
“perception was a key feature in the argument which the Government used during the passing of the Constitutional Reform Act. It was said over and again that the Law Lords, for example, must be removed from this building to the Middlesex Guildhall because they were not perceived to be independent so long as they were sitting here. If perception is important from that point of view, surely it is equally, perhaps even more, important from the point of view of the establishment of this body. If the chairman of the Legal Services Board is appointed by a Minister, it will be perceived by people—perhaps not by people with as much knowledge of these things as we have, but by ordinary people—as making the profession less independent of the Government than it should be. If that is true of the appointment of the chairman and members of the LSB, it is surely even more true of their removal from office, which, again, can be done by the Secretary of State.”—[Official Report, House of Lords, 9 January 2007; Vol. 688, c. 151.]
This measure should be enshrined in statute, otherwise the precedent that it will set is that the Government will not have to put the independence of the judiciary at the forefront of their considerations when making appointments. It is all very well for the Government to say, as they did:
“There is no question of independence being relegated. Codes of practice have to be maintained.”—[Official Report, House of Lords, 16 April 2007; Vol. 691, c. 55.]
Practically speaking, it is what is in statute, not what is hidden away in codes of practice, that will dictate how this Government and future Governments behave. The point is one of principle and of law. It is about ensuring that the Lord Chancellor cannot act as freely as he might wish. We must protect the independence. Unbridled power will lead only to abuse.
 The Government have somewhat naively, we believe, suggested that the Lord Chancellor will be influenced by the seven principles of public life that were set out by the Nolan Committee. Ministerial responsibility, merit, independent scrutiny, equal opportunity, probity, openness, transparency and proportionality should play an important role in the public appointment process. However, how can the Government assure us that the present and future Lord Chancellors will at all times adhere to something that is not law but merely regarded as a guide for all those involved in public service?
Given the Minister’s reliance on the Nolan principles as support for her amendments, we need to consider Nolan in more detail. Under ordinary Nolan procedures, the appointment panel would be chaired by a senior Ministry of Justice civil servant. That will not command confidence so far as independence is concerned. Special arrangements would need to be made, as they were when the Judicial Appointments Commission was created, to guarantee independence of appointment. The panel would be chaired by a distinguished external independent person and not a senior civil servant.
It should be noted that, once the Nolan process was put into practice, the seven individual code principles that underpinned it began to interact and, in some cases, to conflict. That gave rise to three main sources of tension that continue to surround the appointments process: the nature of scrutiny, the definition of merit and whether it remains consistent with the principle of proportionality.
On the proportionality debate, it has become clear that the administrative test of bureaucracy is not simply the extent of the measures involved but how flexible they are. There are many examples to show that the process allows Departments flexibility wherever practicable—for instance, the measures designed to ensure consistent and equal treatment of candidates. There is a requirement to comply, but Departments are left to decide on the detail. Often Departments have the discretion to apply the measures in the way that they think appropriate—for example, when advertising posts and in the case of reappointments. The ultimate flexibility is the commissioner’s willingness to grant exemptions. In 2003-04 some 55 appointments were extended and 57 exemptions granted. That increased in 2004-05 to 85 and 79 respectively.
 A further problem that arose from the Nolan principles was that individuals often felt it inappropriate to ask people of high standing with busy lives to compete for posts. The whole purpose of the Nolan recommendations was to dispense with patronage and the tap on the shoulder, and the requirement to compete is an essential feature of a process that is fair and open to all.
 Those intrinsic defects of the Nolan principles have been further exacerbated by the fact that more than a decade has passed since the first Nolan Committee made its recommendations. Society has developed and moved on since then. Professor King, a member of that first Committee, touched on that point during evidence to the Committee in 1999. Asked about public perception of politicians subsequent to implementation of the Nolan recommendations, Professor King replied:
“I suppose the question that arises in my mind against the background that, on the whole, the Nolan experience has been a very good one is whether there are any issues still outstanding. Did the Nolan Committee make recommendations, the implementation of which has had unforeseen and undesired consequences? Have any new issues arisen that the Nolan Committee did not address four years ago for the good reason that they were not there to be addressed?”
His comments are particularly relevant in relation to the Nolan principle of merit.
The matter of merit versus balanced boards is one of the most widespread and well-known issues to evolve in the appointments process since its introduction in 1996. It appears that the Nolan Committee did not foresee the possible conflict between the traditional approach of appointment on merit and the balancing of boards. Nor could it have foreseen the nature and extent of the diversity debate that developed over time.
In its 2003 report, the Public Administration Committee stated:
“Diversity on public bodies must be increased...Greater diversity on public bodies is not simply a desirable goal. It is a significant component of the basic human right to equal regard and treatment, regardless of difference.”
That sentiment is a long way from Nolan’s original reasoning, which had been to prevent the same few privileged individuals from taking up multiple public appointments. The merit issue reflects not only the dynamics of the appointments process but the influence of the growing pressure in society generally for greater inclusion. That is today’s definition of the same principle, and the public appointments process has developed to meet it.
Overall, the public appointments process has extended in scope and scale far beyond the limits indicated in the first Nolan report. A wide variety of advisory and other public appointments have been added to the bodies that comprised the commissioner’s initial remit. Indeed, the idea of a legal services board, as presented in the Bill, had yet to be conceived.

John Mann: The hon. Gentleman is going into great detail about what happened in the Nolan Committee 10 years ago. I appeared in front of it and gave detailed evidence on behalf of the trade unions, both verbally and in writing. Was not the point of the Nolan Committee’s deliberation that there should be transparency in such appointments, which involved documented details and minutes of what took place, precisely so that those making the appointments could be held accountable by people looking in to see how they were made? How would those principles apply if a separate individual was responsible, not accountable to Parliament or the general public and not required to produce any documentation to show the thought processes? How would that meet the principles of Nolan transparency?

Jonathan Djanogly: I assume that the hon. Gentleman is talking about the Lord Chief Justice. The Nolan principles would apply in relation to his appointment. I am not saying that Nolan should be discounted in this case; I am saying that Nolan is not enough. All this analysis of Nolan presupposes that all Governments will comply with Nolan, which cannot be assumed in the worst-case scenario. The legislation should deal with that, but it does not.
Society has moved on during the past 13 years, so the extent of the changes in the appointments process may be an inescapable consequence of that wider social development. Conversely, the Lord Chief Justice is a person who lives in the modern and, more important, present world. He can keep abreast of social developments and trends. It seems illogical that the Government would prefer to rely on a sometimes outdated appointments process, rather than on a working partnership between two people who can ensure that neither abuses his or her position.

John Mann: How can the Lord Chief Justice, who is not covered by the Nolan requirements and principles and not accountable in terms of any transparency, operate under the Nolan principles? How can the outside world see the basis on which he or she might make such decisions? That is unlike the transparency insisted on by Parliament in agreeing the Nolan principles, which allow the hon. Gentleman, me or anyone else to inspect and challenge what happens with any public appointment at the moment. Time moves on. Is the hon. Gentleman not trying to drag the principles back into the dark ages, pre-Nolan, of no transparency and no accountability?

Jonathan Djanogly: No, the hon. Gentleman has clearly not listened to a word that I have said over the past few minutes. The point is that, to whatever extent Nolan will apply, it must be adapted and moved on, not taken back. I am certainly not saying that the Nolan principles should not be used for appointments. I am simply saying that we need to understand their limitations in the context of the wider issues that apply in this case.

Kevan Jones: Following up the point made by myhon. Friend the Member for Bassetlaw, how could Parliament scrutinise or disagree with the Lord Chief Justice’s decision if he came into conflict with the Lord Chancellor?

Jonathan Djanogly: We have covered that point before. We are considering a balance of power, not absolute power going to any one body.
 The explanatory notes state on page 3 that the legal services board will be “independent from...Government”. However, that is contradicted by the Government’s proposed amendment to schedule 1, which provides for the chairman and members of the board to be appointed by the Lord Chancellor. That will have serious democratic implications, as a senior member of the Executive will ultimately be responsible for governing how the legal profession is regulated. Such a structure will undermine the principle of separation of powers—a principle that the Government themselves have previously and enthusiastically endorsed by proposing the separation of the judiciary from the UK legislative body via the creation of the supreme court.

Simon Hughes: May I pick up the point relating to the intervention by the hon. Member for North Durham before it gets lost? The Lord Chief Justice is not accountable to Parliament, and nor should he or she be. That is exactly the point. We want someone who is not politically accountable and who becomes independent.

Jonathan Djanogly: I thank the hon. Gentleman for making that clear. I repeat that what we seek is a balance of different kinds of appointment that come together to provide a stronger whole.
As I was saying, the division between the judiciary on one side and the UK legislative body on the other should be maintained. In many cases, the state will be a defendant in a case, and its dual role of defendant and regulator creates a direct conflict of interest.
The concordat entrenched the idea that power should not be wielded by one person alone. As was observed in the other place:
“Of course recent Lord Chancellors have been unquestionably impartial in making their appointments, but in the future there is a real and increasing risk that the appointments process will be politicised if things are left as they are.”—[Official Report, House of Lords, 26 January 2004; Vol. 657, c. 20.]
That is why the concordat between the Lord Chancellor and the Lord Chief Justice contains numerous provisions to guard against such a danger.
 On deployment, the Secretary of State, in consultation with the Lord Chief Justice, is responsible for the efficient and effective administration of the court, and the same type of arrangement between the Secretary of State and the Lord Chief Justice applies to appointments to committees, boards and similar bodies.
I have mentioned a couple of examples from the concordat, but there are many examples to illustrate why, as the Lord Chancellor himself said in 2004, it is not right
“that a political appointee...should be able to cut across”
the
“system to appoint who he or she thinks right”—
admittedly, that is in relation to the concordat. It is important to ensure that the system is as open and accountable as it can be and that it is independent of the Government.

John Hemming: Giving reasons is part of accountability, and if the hon. Member for Bassetlaw is concerned that the Lord Chief Justice would not have to give reasons for disagreeing with the Lord Chancellor, would it not be better to table an amendment saying, “and he should give reasons if there is a disagreement,” rather than trying to change this country’s constitution to control the judiciary?

Jonathan Djanogly: The hon. Gentleman makes an interesting point. As I said at the start of my remarks, the Government have simply put in place a straight rebuttal. A Bill has come from the House of Lords that is well thought through and well argued, but the Government, having admittedly engaged with what the Lords had done and tried to move the Bill forward during its various stages in the other place, have now changed their viewpoint. We now have a straight rebuttal, and the hon. Gentleman’s remarks pick up on that. [ Interruption. ] The Minister says, “Absolutely,” but her approach is not helpful, and I hope that she will change it before the final stages of the Bill.
I was talking about the concordat, which is an agreement that safeguards the interest of the public. We agree with that approach, so why are the Government so reluctant to ensure the same thing in the Bill? The Minister needs to answer that question. In terms of overall turnover, the legal profession is estimated to contribute about £20 billion to the economy, of which £17 billion is accounted for by solicitors. This debate might be about a small part of a big Bill, but the subject goes to the heart of the English legal system, the running of the day-to-day legal industry and the image that outsiders have of both.
The Government have failed to appreciate, or perhaps even to consider, the consequential effects of allowing the Lord Chancellor alone to appoint, and terminate the appointments of, members of the Legal Services Board. Our legal profession has always been competitive overseas, and it is responsible for significant invisible legal services exports, which are estimated at £2 billion a year. Overseas legal professions and commercial consumers of legal services have expressed concern that the Government’s proposed legislation would act against the profession’s independence and prevent it from competing effectively for the provision of legal services overseas. How do the Government propose to deal with that? Will the Minister outline what discussions she has had onclause 1 and schedule 1 with law firms in this country, foreign Governments and legal regulatory bodies, and what further discussions she will hold?
I should now like to read out parts of a letter from the chairman of the Bar Council and the country’s five largest law firms, which operate all over the world—the so-called magic circle firms. The letter was sent to the Economic Secretary on 1 June by senior partners at Linklaters, Slaughter and May, Freshfields Bruckhaus Deringer, Allen and Overy, and Clifford Chance, as well as by Geoffrey Vos, QC, the chairman of the Bar Council—a pretty serious and representative bunch of people from the profession—who say:
“We are writing to express concern about an aspect of the Legal Services Bill, which will receive its second reading in the Commons on Monday 4th June 2007.
We should say at the outset that both the Bar Council and the Law Society have broadly supported the regime proposed by the Bill, and have to date suggested fine-tuning amendments, intended to confirm and strengthen the international competitiveness of our legal profession, and to further the interests of the public and of consumers of legal services. We know that you are aware of these concerns.
The Bill, as originally amended by the Government in the House of Lords, provided that the new oversight regulator of the legal profession, the Legal Services Board...should be appointed by the Lord Chancellor.
We supported an amendment in the House of Lords, which meant that the LSB should instead be appointed by the Lord Chancellor ‘with the concurrence of the Lord Chief Justice’. The purpose of this amendment (which was passed with a majority of 50) was to ensure that the regulation of the legal profession is transparently independent of Government control, and is seen as such by the widest possible audience.
There are broadly three reasons why regulation of lawyers must be and be seen to be independent of Government control.
First, an independent legal profession provides the ultimate safeguard for the rights of the individual against abuse of power by the State.
Secondly, our legal profession has always been very competitive overseas, and has been responsible for very significant invisible exports of legal services, now amounting to over £2 billion per annum. Overseas legal professions and commercial consumers of legal services have expressed concern that the Government's proposed legislation would vitiate the profession's independence, and prevent it competing effectively for the provision of legal services overseas.
Thirdly, the Government (through the Legal Services Commission and the Government Legal Service) is the single largest purchaser of legal services, and therefore has a clear conflict of interest between its own interests as purchaser and its interests as the appointer of the ultimate legal services regulator.
It is the second of these reasons that we would expect to be of most concern to you. By way of example, the German legal profession has written a formal letter expressing concern about the independence of the legal profession from Government under the proposed regime. Many of us have personally defended the Government's reforms at international legal conferences and events in the course of this year.
However, we believe that the competitiveness of the legal profession could be seriously adversely affected by the Government's proposal. We feel you would wish to be made aware of this given your reported remarks after the Chancellor chaired the Second High Level Group on Financial Services on9 May 2007: ‘I believe that, with the measures we have taken, together with the FSA’s move towards more principles-based regulation. London and the UK-based financial sector will continue to attract the best global talent and to be a world leader for innovation, asset management, [and] global regulation.’ One of the measures referred to was the announcement of plans for a new commercial court building in the City, providing world-class facilities for handling business cases from around the world.
As we understand the position, the Government intends to try to reverse the Lords’ amendment on this issue in the Commons. We believe that this would be short-sighted and damaging to the international competitiveness of the whole profession.
The only argument we have heard in favour of allowing the Lord Chancellor to appoint the LSB alone is that he would, in some way, be better able to protect consumers. We believe that the Lord Chief Justice must concur in the appointment of the LSB, because he is the head of the justice system, and, as such, has the greatest interest in safeguarding the independence of the profession which exists to serve the justice system he is in charge of. The Lord Chief Justice is no less able than the Lord Chancellor to give effect to the intended statutory regulatory objective to protect the interests of consumers.”
The letter goes on to state:
“We would be happy to attend a meeting to explain our concerns in more detail.”
 That is a very telling exhibit. The core of the commercial legal profession in this country is telling the Government that it disagrees with their proposals because they will materially disadvantage Britain’s commercial interests across the world. The Government should listen to what it has to say.

Kevan Jones: I am just about to get the Kleenex out and start crying about the stress that this will cause to international lawyers and their clients. Is it not a fact that the legal services ombudsman, who has extensive powers to regulate the legal profession, including the ability to fine people, is appointed by the Lord Chancellor alone? That has not halted or wrecked international trade, so why do the hon. Gentleman and his friends in the City insist on changing what has worked quite well since 1990?

Jonathan Djanogly: The hon. Gentleman sat through the discussion on Second Reading and he had quite a lot to say. He heard what I and my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) said. We both made it clear that we regard the Bill as a once-in-a-generation chance to change for the better the regulatory and business structure of legal services and the way in which they deal with complaints. That is still our position. I think that that basically answers his point.

Bob Neill: Does not the hon. Member for North Durham miss the important point that while the ombudsman has significant powers in relation to the legal profession, they are not responsible for its regulation? They do not draw up and oversee the framework under which the profession operates, and that is an important difference.

Jonathan Djanogly: My hon. Friend makes an important point, and I thank him for that clarification.

John Hemming: Has not the hon. Member for North Durham missed the point, too, that the Legal Services Board has direct powers of intervention against individual participants?

Jonathan Djanogly: I thank the hon. Gentleman for that further helpful intervention.

Kevan Jones: The ombudsman has
“the power to recommend that the professional body reconsider the complaint. S/he may also recommend that the professional body and/or the lawyer complained about pay compensation for loss, distress or inconvenience. The Ombudsman has a further power to make binding orders for the payment of compensation.”
Those are strong powers, not the weak powers that have been mentioned..
 John Hemming rose—

Jonathan Djanogly: We are going round in circles a little, but the hon. Member for Birmingham, Yardley is dying to get in.

John Hemming: Does the hon. Gentleman accept that that does not include the power to stop someone practising?

Jonathan Djanogly: The hon. Gentleman makes an important point. The Legal Services Board will have different powers from those that have been mentioned.
 In that context, it seems weak for the Lord Chancellor to argue that he can be relied on to appoint the best candidates regardless of their political beliefs. The independence of the legal profession is a key selling point in its ability to win work from overseas clients. The Government must accept that legal independence needs to be protected. Allowing political appointees to be protected by being checked by the Lord Chief Justice will allow that aim to be achieved. Aside from the constitutional significance of the issue, the perceived independence of the Legal Services Board will strengthen the legal profession in overseas markets. It will help to safeguard the £2 billion annual contribution that legal services make to UK service exports, a figure that has quadrupled in the past decade. That includes not only English solicitors being asked to document contracts in far-flung places, but non-English parties signing contracts that have nothing to do with England but which have English jurisdiction and court clauses, because our legal system and its courts are regarded as impartial, non-political and fair.
We should be careful not to put that at risk, but that is what the Government propose. In an e-mail to my hon. Friend the Member for North-East Hertfordshire, Geoffrey Vos, the chairman of the Bar Council, said:
“I said I would write to you to explain the concerns of the German legal profession as they have been expressed to me in various discussions with them. I have spoken on several occasions with members of the BRAK, the German regulator of the legal profession (not the representative organisation, as Bridget Prentice is reported as saying on second reading), including Dr Dombek amongst others. I have been invited to Berlin on Tuesday 26th June to meet with Dr Dombek and other BRAK officers specifically to take these discussions further.
I also visited Berlin a few weeks ago specifically to discuss these issues with the officers of the DAV. The DAV has about 65,000 members and is the largest representative organisation of German lawyers. There are about 120,000 lawyers in total in Germany.
Furthermore, similar concerns to the ones I describe below have been expressed to me at international conferences this year (primarily Vienna in February, and Zagreb in May) by Bar Leaders from other countries including Portugal and France.”

Adrian Bailey: I listened with interest to the hon. Gentleman’s litany of German and continental opinions of the legislation. Given his party’s aversion to European interference in the British legal system, why should we take his comments now any more seriously than before?

Jonathan Djanogly: I am not sure on what level to take that remark. Let me just say that I do not think we are on the same wavelength.
Geoffrey Vos went on to say that foreign regulators
“are concerned that the Legal Services Board would be a Government offshoot. If it were, they would be worried that it would regulate the legal profession for the benefit of Government, and in such a way that prevented the profession actually being, and being seen to be, wholly independent of Government. I have tried to persuade them that this concern is unlikely to be real, because there are many safeguards in place in relation to public appointments which will prevent the Government improperly manipulating the appointments process. This does not wholly assuage their concerns. But I have not been keen to stir the concerns up. I have tried to persuade them that they need not be too worried, and that the addition of the LCJ’s concurrence would resolve the issue completely...BRAK representatives are, however, so interested in this Bill generally and the independence issue in particular, that they seem to attend many seminars on the subject held in London.
I hope this is some help.”
I believe that I have given a clear series of examples showing how the issue has not just national, but international, ramifications. The Government have simply not taken that on board, and I hope that the Minister will now address those international issues. We should not fall into the trap of simply looking at British consumers, because the issues go much further. Overseas investment is not the only matter that the Government seem to have overlooked. They have failed, too, to note that, through the Legal Services Commission and the Government Legal Service, they are the single largest purchaser of legal services, so there is a conflict between their interests as a purchaser and their interests as the appointer of the ultimate legal services regulator.

It being One o’clock, The Chairmanadjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four o’clock.